Kirkova v Stojanov
[2021] FCCA 398
•5 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Kirkova v Stojanov [2021] FCCA 398
File number(s): SYG 1274 of 2020 Judgment of: JUDGE OBRADOVIC Date of judgment: 5 March 2021 Catchwords: BANKRUPTCY – Application for sequestration order – whether preconditions for making sequestration order satisfied – whether respondent left Australia with intent to defeat or delay his creditors - sequestration order made. Legislation: Bankruptcy Act 1966 (Cth), ss 40, 42, 43, 52 Cases cited: Barton v Deputy Federal Commissioner of Taxation [1974] HCA 43
Burrell v Reavill Farm Pty Ltd & Ors [2014] FCCA 1449
The Owners Strata Plan No. 6766 v Nomchong (No.2) [2018] FCCA 3450
Deputy Commissioner of Taxation v Cranswick (No.2) [2010] FCA 1155
Deputy Commissioner of Taxation v Wachjo [2005] FCA 561
Edge Technology Pty Ltd v Wang [2000] FCA 1586
Ex parte Goater; Re Finney (1874) 30 LT 620
Re Andrews, Ex Parte Manning (1966) 8 FLR 56
Re Thai; Ex parte Commissioner of Taxation [1994] FCA 1071Number of paragraphs: 35 Date of last submission/s: 1 March 2021 Date of hearing: 1 March 2021 Place: Parramatta Solicitors for the Applicant Colin Daley Quinn Solicitors Counsel for the Applicant Mr Woods Appearing for the Respondent No appearance ORDERS
SYG 1274 of 2020 BETWEEN: ANASTAZIA KIRKOVA
Applicant
AND: MARTIN STOJANOV
Respondent
ORDER MADE BY:
JUDGE OBRADOVIC
DATE OF ORDER:
5 MARCH 2021
THE COURT ORDERS THAT:
1.The estate of Martin Stojanov is sequestered under the Bankruptcy Act 1966 (Cth).
2.The Applicant creditor’s costs fixed in the amount of $14,312.00 be paid from the estate of the Respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
NOTATION:
A.The Court notes that the date of the act of bankruptcy is 3 February 2020.
REASONS FOR JUDGMENT
JUDGE OBRADOVIC
By Creditor’s Petition filed on 27 May 2020, as amended on 22 October 2020, pursuant to s.42 of the Bankruptcy Act 1966 (Cth) (“the Act”) the applicant makes an application for a sequestration order against the respondent. The applicant has filed an affidavit verifying the petition.
The applicant asserts that the respondent committed an act of bankruptcy as provided for in s.40(1)(c)(i) and (ii) of the Act, namely, that the respondent, with intent to defeat or delay his creditors departed or remained outside of Australia and/or departed from his usual dwelling house or usual place of business.
The respondent was served personally with the Creditor’s Petition on 20 August 2020.
On 3 September 2020, the Court made orders listing the petition for hearing at 10.15am on 23 October 2020.
On 14 October 2020, the respondent filed a Notice of Appearance, Notice of Grounds of Opposition and Affidavit. The respondent opposes the sequestration order on the following two basis:
a.That he has not departed or remained outside of Australia or departed his dwelling or usual place of business or otherwise absented himself, with the intent to defeat or delay creditors, but rather that his departure from Australia was done in compliance with his visa conditions; and
b.As he left Australia on 30 June 2019, even if such a departure was an act of bankruptcy it was committed more than 6 months before the presentation of the petition.
The hearing of the petition on 23 October 2020 was adjourned to 2.15pm on 1 March 2021. The hearing was adjourned as the respondent was not available for cross-examination.
On 1 March 2021, the respondent did not appear at the hearing of the petition. His lawyers had withdrawn on 19 February 2021. At the hearing, the Court attempted to telephone the respondent on the telephone number provided in the Notice of Withdrawal of Lawyer filed by the respondent’s lawyers. The telephone number provided was an incorrect number.
DETERMINATION
Before the Court can make a sequestration order it must be satisfied as to the matters specified in ss.43 and 52(1) of the Act. If the Court is so satisfied, the Court may make a sequestration order. If the Court is not so satisfied it must dismiss the petition. Furthermore, if, under s.52(2) of the Act, the Court is satisfied that the debtor is able to pay his debts or that for some other sufficient cause a sequestration order ought not be made, the Court may dismiss the petition (Burrell v Reavill Farm Pty Ltd & Ors [2014] FCCA 1449 at [48], see also The Owners Strata Plan No. 6766 v Nomchong (No.2) [2018] FCCA 3450).
Did the Respondent commit an act of bankruptcy?
On 13 September 2018, the applicant commenced proceedings against the respondent in the District Court of New South Wales (“District Court proceedings”), in respect of monies loaned by the applicant to the respondent between 28 February 2017 and 23 June 2017, but not repaid.
The respondent filed a defence in the District Court proceedings on 7 December 2019, and an amended defence on 21 February 2019. At the time of verifying his defence, the respondent deposed that his residential address was Unit 3, 10-12 Regent St, Bexley, NSW.
At the time of the District Court proceedings, the respondent was the director and shareholder of Makonet International Designs Pty Ltd, which had its registered business address as Unit 21, 635-637 Princes Hwy, Kogarah, NSW.
In the District Court proceedings, the respondent was represented by Badarne Lawyers, who corresponded with the applicant’s solicitors in the District Court proceedings between October 2018 and July 2019, in respect of particulars, amended pleadings and service of evidence.
The respondent departed Australia on 30 June 2019 for the Former Yugoslav Republic of Macedonia (now known as North Macedonia) (“Macedonia”). Whilst the respondent cites his visa conditions as the reason for his departure, there is no evidence of the particulars of his visa nor the conditions which might have been attached to it.
The respondent arrived in New Zealand on 5 September 2019, where he remained until at least 7 October 2020. There is no evidence before the Court as to why the respondent chose to go to New Zealand, whether he is permanently living there, what his residency status might be, or any explanation as to how after departing Australia in June 2019 he came to be in New Zealand in September 2019. At the same time, it is clear from the applicant’s case that the respondent was (and likely remains) operating a registered business in New Zealand. That business was incorporated on 3 February 2020, a matter which the applicant learnt about in or about March 2020.
On 27 September 2019, Badarne Lawyers filed in the District Court proceedings, a Notice of Ceasing to Act. That notice was not served on the applicant, but the applicant nevertheless learnt of it through the District Court online system. As at 27 September 2019 when the Notice of Ceasing to Act was filed, the respondent’s lawyers stated that the last residential or business address of the respondent known to them was Unit 3, 10-12 Regent St, Bexley, NSW.
On 7 November 2019, the District Court made orders striking out the respondent’s defence therein, and on 14 November 2019, a letter was sent by the applicant’s solicitors to the last known address of the respondent informing him of the orders made by the District Court on 7 November 2019.
On 3 February 2020, judgement in the amount of $690,991 plus costs was entered by the District Court against the respondent. On 13 February 2020, a letter was sent to the last known address of the respondent advising him of the judgment.
On 27 May 2020, the applicant filed the Creditor’s Petition.
Badarne Lawyers, being the same lawyers who acted for the respondent in the District Court proceedings, represented the respondent in these proceedings until 16 February 2021, being the date they filed a Notice of Withdrawal of Lawyer.
When the petition was before the Court for hearing on 23 October 2020, the respondent, through his lawyers, advised the Court that he would be in Australia in March 2021, and on the basis of those representations, the hearing was adjourned to accommodate the respondent.
Section 40(1)(c) of the Act, requires a physical act that is accompanied by the necessary intent in order to satisfy the notion of defeating or delaying the debtor’s creditors (Deputy Commissioner of Taxation v Wachjo [2005] FCA 561 (“Wachjo”) at [21].
The requisite intent to which s.40(1)(c) refers need not be the debtor’s sole intent in leaving or remaining out of the country. (Barton v Deputy Federal Commissioner of Taxation [1974] HCA 43 at [8], referred to in Wachjo at [21]).
Intent to defeat or delay is a question of fact. It is usually shown by inference from the circumstances in which the debtor departed (Re Andrews, Ex Parte Manning (1966) 8 FLR 56 at 58, referred to in Wachjo at [21]). In considering the conduct of the debtor against a background of all the facts and circumstances, the Court must infer that a person intends the necessary consequences of his or her acts (Edge Technology Pty Ltd v Wang [2000] FCA 1586 at [5] citing Ex parte Goater; Re Finney (1874) 30 LT 620 at 621, referred to in Wachjo at [21]).
In circumstances where the respondent was represented in the District Court proceedings until September 2019, and had participated in those proceedings by filing his defence, it is more probable than not that he must have been aware that the likely outcome if he disengaged from those proceedings was that judgment would be entered against him. This is particularly so where the respondent has chosen not to put on any evidence about the District Court proceedings, and in particular his knowledge or otherwise, of the outcome of those proceedings. The fact of him being absent from Australia at the time, could not of itself prevented him from participating (although it might have made it logistically more difficult) and it certainly could not have prevented him from engaging lawyers to represent him.
There is no evidence that the respondent, upon his departure from Australia, notified the applicant that he was leaving and where he was going. Indeed, his lawyers at the time notified the District Court of New South Wales and the applicant through the filing of the Notice of Ceasing to Act, that the respondent’s address was in Bexley, NSW. There is no evidence that the respondent, upon going to New Zealand, notified the applicant that this was where he was then living and running a business.
The respondent did not appear at the hearing of the petition and could not be contacted on the telephone number provided in the Notice of Withdrawal filed by his lawyers. The respondent had not filed any Notice of Address for Service after 19 February 2021.
Whilst the Court is aware of the general COVID-19 travel restrictions presently in place, the respondent had not put before the Court at any time between 23 October 2020 to the date of hearing of the petition on 1 March 2021 any of the following:
a.What efforts he had made, if any, to return to Australia to be present at the hearing on 1 March 2021 and otherwise (including any applications for dispensation in respect of any border closures/restrictions which might have been in place either in New Zealand or Australia); and
b.What efforts he had made, if any, to apply to appear at the hearing either via audio visual link or telephone link.
Indeed, many matters which were relevant in respect of the petition, and which could only have been within the respondent’s knowledge were not put before the Court by the respondent.
The Court is satisfied that the respondent committed an act of bankruptcy as he departed or remained out of Australia and/or departed from his usual place of business, with the intent to defeat or delay his creditors, in particular the applicant. This is so because:
a.The respondent left Australia for Macedonia on 30 June 2019, and arrived in New Zealand on 5 September 2019, where he remained until at least early October 2020;
b.At the time the respondent departed Australia, the District Court proceedings had been conducted for over 9 months;
c.The respondent must have been aware of the impeding liability due to his involvement in the District Court proceedings and his abandonment of those proceedings, he also must have been aware that judgment would be entered against him in those circumstances. Furthermore, the respondent has offered no explanation as to why he abandoned the District Court proceedings;
d.The respondent has offered no explanation as to why he ceased instructing his legal representatives in the District Court proceedings or why they filed a Notice of Ceasing to Act;
e.The respondent has offered no explanation as to why the applicant was not notified of his departure from Australia as at June 2019 or thereafter, nor has he offered any explanation as to why the applicant was not provided with an address and contact details for the respondent (in Macedonian and/or New Zealand) which were current, in circumstances where there were proceedings on foot and where the respondent owed the applicant a significant debt;
f.The respondent acted in a manner which made it difficult (if not impossible) for the applicant to ascertain his whereabouts; and
g.The respondent has not explained to this Court any specific reason for remaining overseas which may negate or assist in negating the inference as to intent.
(see Deputy Commissioner of Taxation v Cranswick (No.2) [2010] FCA 1155 (“Cranswick”) at [47])
The act of bankruptcy is a continuing one. The respondent remains absent from Australia for reasons which remain unexplained. The inference remains that he does so in order to delay or defeat his creditors. Indeed, the respondent commits an act of bankruptcy each day he remains out of Australia with the requisite intent (Re Thai; Ex parte Commissioner of Taxation [1994] FCA 1071, cited in Cranswick at [47]).
The act of bankruptcy first occurred on 30 June 2019, and as it is a continuing one, it continued up to and from 27 November 2019, being a date 6 months before the filing of the Creditor’s petition on 27 May 2020. It was an act of bankruptcy on the day judgement was entered by the District Court, namely 3 February 2020, and it remains a continuing act of bankruptcy. Section 43(1)(a) of the Act is satisfied.
Connection with Australia
Makonet International Designs Pty Ltd was de-registered on 25 April 2020. Prior to its de-registration, and therefore including as at 27 November 2019 and on 3 February 2020, the respondent was the sole director, secretary and shareholder of the company and its registered office and place of business was Unit 21, 635-637 Princes Hwy, Kogarah, NW. Section 43(1)(b) of the Act is satisfied.
The debt
The respondent owed debts in a liquidated sum to the applicant, in respect of which judgment was obtained by the applicant on 3 February 2020. The debt is payable immediately and remains outstanding. Section 44 of the Act is satisfied.
CONCLUSION
At the hearing of the Creditor’s Petition, the Court was satisfied of:
a.The matters set out in the petition;
b.Service of the petition; and
c.The fact that the debt on which the applicant relies on remains owing.
Section 52 of the Act is therefore satisfied, and the Court makes the sequestration order sought.
36 I certify that the preceding thirty five (35) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic.
Associate:
Dated: 5 March 2021
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